Lack of proper signature does not disqualify refund claim

In a recently issued legal memorandum, ILM 200931044, the Service addressed the issue of whether amended returns filed on Forms 1120X constituted valid formal or informal refund claims, or whether the lack of proper signature disqualified them.


Background

In this case, the refund claims were timely filed with the Service Center. The claims were signed by an officer of a company that was a party to the taxpayer's bankruptcy proceeding. That individual, however, had no authority under IRC Sections 6061 or 6062 to sign returns for the taxpayer. The claims were subsequently perfected by the taxpayer, upon rejection by the Service.


Informal refund claims

The Service relied on Supreme Court's Decision in United States v. Kales, 314 U.S. 186 (1941), which held that a notice fairly advising the Service of the nature of the taxpayer's claim, which the Service could reject because it did not comply with the formal requirements of the regulations, will nevertheless be treated as a valid claim when the formal defects are remedied by amendment after the lapse of the statutory period. The Service noted that informal claims must contain (1) a written component; (2) some demand for refund; and (3) "sufficient information as to the tax and the year to enable the Internal Revenue Service to commence, if it wishes, an examination into the claim." American Standard Radiator and Sanitary Corp. v. United States, 318 F.2d 915 (Ct. Cl. 1963)


Conclusion

The Service concluded that amended returns which lacked proper signatures should be treated as informal refund claims. The Service stated that the Forms 1120X in question quantified the refunds, identified the relevant years and stated the basis for the claims. The signature flaw is what made the claims "informal" instead of "formal", but they did nothing to prevent the Service from understanding the claims.